Naspers spins off Multichoice at initial value of R42bn

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Naspers spun off African pay-TV unit MultiChoice at an initial valuation of about R42 billion ($3 billion), enabling the continent’s biggest company to focus on its current incarnation as a global internet-technology firm.

MultiChoice shares started trading at R95.5 in Johannesburg, and were at R96.15 as of 09:13.

Naspers, which makes up almost a fifth of Johannesburg’s stock exchange, traded 2.3% lower at R3,069.99 rand after the spin off. 

Key Insights

MultiChoice’s valuation could eventually settle at about $5 billion to $6 billion, according to Bloomberg Intelligence analyst John Davies. The shares may be volatile in the meantime, however, as Naspers shareholders who automatically receive MultiChoice stock take time to decide whether or not they want a pure Africa-TV play.

Naspers has come a long way since founding MultiChoice in 1985, most notably making a jackpot investment in Chinese Internet giant Tencent Holdings in 2001.

That 31% stake is now valued at about $129 billion, more than Naspers as a whole, and an effort to close the deficit is one of the reasons behind the MultiChoice separation. MultiChoice has almost 14 million subscribers, of which about half are in South Africa. Among its challenges as a standalone company will be to reverse slowing revenue growth on the rest of the continent, where cheaper alternatives - including Netflix - have sprung up alongside rising household incomes and faster internet speeds. 

* Fin24 is part of Media24, a subsidiary of Naspers

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